It seems like there is a new type of investment created every five minutes and although each can be very different in nature, they all have a common theme; to make us multi-millionaires in our sleep! Here is a look back at some of those investments that never quite worked out how they were planned for various reasons, either poor planning but the responsible institutions or changing economic circumstances.

Indexed funds and exchange-traded funds have a poor track record when it comes to looking at some of the worst investments ever. Despite this, the Vandex 500 index holds over $115 billion worth of assets. Now where index tracking funds fall down is not on the poor performance of the related stock, but on the extortionate rates charged by brokers and fund managers. As soon as you invest through a fund manager, you will on average throw 4.5% of your investment down the drain by way of charges that are well over the odds.

The dot com boom and subsequent bust also provided us with some of the worst investments ever. One of the most infamous was the collapse of boo.com, a company which managed to spend $188 million in just six months before finally being declared bankrupt a few days later. Of the individual investors, a wealth Lebanese family reportedly lost over $20m when boo.com collapsed. Another sorry story is that of e.Digital Corp, whose share price rose to a magnificent high of $24.50 in January 2000 before it quickly retraced and has traded below $0.29 since 2006, costing investors millions.

Even the trusted endowment can be a horror story for some investors. The ’safe’ investment which matures over a specified period can be costly to those that seek to cash in on their fund before it reaches maturity. Surrendering a policy to the broker can cost the investor as much as 35% compared to the value they would achieve if they sold the endowment to a third party. This alone can be an expensive mistake and just goes to show that searching around for the best deal is always worthwhile!

Hopefully this hasn’t scared you away from the financial markets, instead providing a warning that even the best sometimes get it wrong and that if you are about to make an investment of any kind, not least those mentioned above, then you should seek professional advice and evaluate the market before you proceed. Take care!

John McE writes articles on a number of subjects including investments & endowments. For more about selling an endowment see AAP.